An Overview of the Chapter 13 Bankruptcy Process

Filing for bankruptcy is a very important decision, and requires an individual to completely consider their current financial state as well as the options they have in regard to the debt they have collected. After carefully considering all factors and still wanting to move forward, then you are officially declaring that your liabilities have exceeded your assets and you are unable to follow through on your financial obligations and debts owed to creditors.

There are various chapters of bankruptcy for which an individual can file for – whether it is Chapter 7, Chapter 13, or another applicable chapter. Many people are not familiar with all of their options when it comes to actually filing so it is best to seek legal and professional advice prior to filing.

In this article, we have detailed the overview and process of the Chapter 13 bankruptcy filing:

Your Brief Overview

In regard to the Chapter 13 process of bankruptcy, the individual that is looking to file for this actually works with a legal team to come up with a repayment plan for the creditors. They then present this proposed plan to the creditors to see if they can come to an agreement. This differs from other chapters because the individual in debt is not surrendering the loan altogether.

Below outlines the actual process for filing for bankruptcy via Chapter 13:

Step 1: Your Petition Filing

Following your decision to move forward with filing for bankruptcy, and after consulting with a legal team on which route to go, the very next step would be to file your petition for Chapter 13 Bankruptcy. This is one of the most crucial steps in this process. It is a voluntary petition filed by the individual in debt. During this initial petition filing, you may not need your full repayment plan outlined yet because you can complete this at a later step. However, what is included in this step is an outline and presentation of the assets and liabilities, in addition to financial states, for the debtor. This is all compiled for the petition filing.

During this repayment plan write-up, though, there typically is a draft of roadmap prepared for future steps. This roadmap outlines a clear direction and repayment plan on how the individual in debt will eventually pay back the debts they owe to the various creditors. Most of the time, this payment plan lasts from 3 to 5 years in regard to a payment schedule. The amount that agreed upon by both parties is the standing amount that the debtor must repay per a monthly basis – or, however the agreement stands based on each individual case. The debtor pays the trustee, and the trustee distributes the amount to the various creditors accordingly based on the agreed upon ratio.

Step 2: Creditors Meeting Via the Bankruptcy Court

The second step in this process is for the bankruptcy court to schedule a meeting in order to have the voluntary petition as well as the repayment plan and scheduled agreed upon, and signed in a court of law. Here, the individual in debt, the trustee and the creditors are all in attendance most of the time. During this meeting, the trustee and the creditors are permitted to ask the debtor various questions regarding their financial state and the plan that they have proposed for repayment. Sometimes, this meeting only requires the attendance of the trustee and the debtor.

Step 3: Repayment Plan Confirmation

This particular step can be a bit of lengthy step because it can take a few weeks to a few months to reach completion. At this step, creditors can disagree or raise objections in regard to the debtor’s repayment plan. This means that they repayment plan may have to be altered, adjusted or changed completely.

However, once it has finally received confirmation, no term of the repayment plan or schedule can be altered provided permission has been obtained from the court.

Step 4: Discharge

The final step of this process is the discharge step. This typically asserts that the debtor is released of all debts, or has secured a repayment plan that was agreed upon by all parties involved. However, not all debts they have obtained may be discharged. The debtor receives a discharge after they have complied with all the regulations and terms of chapter 13 confirmed by the court.

Author Bio:

This post was written by Loan Lawyers. Loan Lawyers is a team of experienced and aggressive consumer rights litigation and trial attorneys in South Florida helping clients throughout the state of Florida.